New Delhi, Dec 17: The government has revived plans to put e-commerce players on a tight leash, including imposing checks on discounting and unbridled cashbacks and freebies, in a bid to clamp down on “predatory behaviour”.
Sources said that the commerce and industry ministry is looking at ways to strengthen the e-commerce sector while safeguarding the interests of domestic retailers. Many of them are complaining about serious loss of business to “adverse competition” from e-tailers as well as the impact of demonetisation and goods and services tax. Lobby groups such as CAIT and Swadeshi Jagran Manch, an RSS affiliate, have taken up cudgels on behalf of local kirana and small shop owners.
Government officials, however, said the move was not meant to woo local traders and was instead aimed at putting in place a policy ahead of an expected push at the WTO to regulate e-commerce globally, something that unites the US and China that are engaged in a bitter trade battle.
A draft e-commerce policy — which was junked for all practical purposes within days of it being shared with stakeholders last July — had proposed a sunset clause defining the maximum duration for differential pricing strategies such as “deep discounts”. It had also proposed preferential treatment for homegrown e-commerce players while allowing foreign direct investment in some segments. Although FDI has been ruled out, the issue around regulating e-commerce is back on the table, senior officials said, adding that details were yet to be thrashed out. “Globally, we have seen the disappearance of retail stores, be it book shops or smaller shops. Even large format sector has come under pressure,” said a source.
Once physical stores vanish, the e-commerce players dictate consumer choice on what we eat and what we wear. We should not allow that to happen,” said a source. A growing view in the government is that e-commerce giants, like Amazon and Alibaba, have deep pockets and are willing to lose money for years till competition from smaller players is nearly wiped out. At the same time, Indian competition laws are not seen to be sufficient in tackling what many describe as “predatory practices”.
The Indian e-commerce market is projected to touch $200 billion in a decade. The policy will not just impact companies such as Amazon, Flipkart, Paytm Mall, Urban Ladder and Lenskart but will also cover food delivery apps and aggregators.
Over the next few weeks, the ministry is planning to put in place a revamped policy prescription in consultation with other departments, like information technology that had concerns about the earlier draft, before seeking cabinet approval. Several elements of draft policy like data localisation and a crackdown against foreign companies selling in India without paying duty has begun with the department of industrial policy and promotion initiating consultations.